How Bad Was the Housing Bust?

The housing crisis that led to the Great Recession is now memorialized by the results of the 2010 census that were released today, but the spin put on those results is very different depending upon whether you are reading the Census Bureau's report, or reading the headline news. The Census Bureau's headline was: "2010 Census Shows Second Highest Homeownership Rate on Record Despite Largest Decrease since 1940;" whereas the Associated Press headline left out the "good" news and focused only on the bad: "Census: Housing bust worst since Great Depression." The Census Bureau summarized the data as showing that:

[T]he homeownership rate is the second highest on record, behind only 2000, since homeownership data collection began in 1890. However, the rate decreased by 1.1 percentage points to 65.1 percent between 2000 and 2010. The decrease is the largest since the period from 1930 to 1940.

The caveat here, however, is that census provides a portrait of what's happening only every 10 years. In between 2000 and 2010, the homeownership rate is estimated to have hit 70 percent, and the change from that level is what has been so devastating. Still, that was based on unsustainable mortgage lending policies and unsustainable housing prices, and as those aspects of the housing market get back under control, the future may not be totally bleak:

Peter Francese, founder of American Demographics magazine who is now analyst for the MetLife Mature Market Institute, believes Americans aren't completely giving up on homeownership. He noted millions of young adults are delaying home-buying while they temporarily double-up with their parents, representing pent-up demand for houses that will surface once the job market begins to recover.